The U.S. Courthouse for the Eastern District of Virginia, the location for today's hearing in the MegaUpload case.Photo by Greg Sandoval/CNET

ALEXANDRIA, Va.--MegaUpload's lawyers got much of what they asked for today from a federal district court regarding what should be done with the company's servers and user data.

Lawyers representing consumers, MegaUpload, the six major Hollywood studios, the U.S. government, and MegaUpload's hosting service were all in court to voice their opinion about what should be done with billions of digital files belonging to maybe as many as 60 million former users of the cyberlocker service. The government shut down the site in January and filed criminal copyright charges against MegaUpload's managers, including founder Kim DotCom, in a case that has generated massive international interest.

Kim DotCom, the man behind MegaUploadPhoto by 3 News

Since then, MegaUpload has been unable to keep up the payments to Carpathia Hosting. Instead of destroying the user data, Carpathia has preserved MegaUpload's servers at its own expense. Carpathia has asked the court for financial relief in the form of a protective order. The parties were in court to determine what should be done with the MegaUpload's data.

Ira Rothken, MegaUpload's lead attorney, asked U.S. District Judge Liam O'Grady to send all the parties interested in the data back to the negotiating table to continue looking for a solution they can agree on.

And that's exactly what O'Grady told them to do. What's most important about the judge's decision was that the user data will continue to be preserved.

O'Grady told the parties that unless they wanted to hire their own "special master" to help mediate the talks, then he would send them to a magistrate judge known for his abilities to "bring people together" and hash out agreements.

If you're rooting for MegaUpload or if you're one of the people who stored content on the service, then there's some more good news. O'Grady said he was "sympathetic" with Carpathia's financial plight and he also seemed dismissive of the government's argument that Carpathia shouldn't be allowed to return the information to MegaUpload.

Ira Rothken, a lawyer who has defended numerous startups accused of copyright violations, argued successfully in court today for more time to figure out what should be done with MegaUpload's user data.Photo by Greg Sandoval/CNET

Rothken had tried to buy the servers from Carpathia but the government nixed the deal. MegaUpload says it needs the servers to help prove its innocence.

It wasn't a big victory but my read of the tea leaves was that the judge is reluctant to make any ruling now that would result in the destruction of the data.

After hearing arguments from so many parties, O'Grady seemed a little desperate to find somewhere to park the servers. When an attorney representing one copyright owner argued that his client wanted the data preserved, the judge sighed and asked him, tongue in cheek: "Your parties aren't interested in taking possession of the data are they?"

Here are a few more highlights:

While O'Grady was sympathetic to Carpathia's financial burden, the government's lawyers told the judge that the company was no babe in the woods. They said that the company generated $35 million from working with MegaUpload and suggested that Carpathia may bear some of the responsibility for the copyright infringement that allegedly occurred at MegaUpload. They told the judge there's a chance that Carpathia will face a civil suit.

The government's lawyers said Carpathia just wants to "get out" of the servers but that doesn't mean U.S. taxpayers have to ride to the rescue.

The Motion Picture Association of America, the trade group representing the six top Hollywood film studios, softened its stance on what should be done with the data. The group had originally asked that the court preserve the information so it could access it if it chooses to file any civil suits. But today in court, the lawyers representing the MPAA said their only concern was preventing any pirated movies and TV shows from being redistributed. The MPAA asserts that the majority of the information stored on MegaUpload's servers rightfully belongs to the studios.

Lawyers for the Electronic Frontier Foundation, which advocates for Internet users and tech companies, said it believes an independent entity should oversee a system whereby MegaUpload's users can retrieve legal content before it's too late. When the judge sounded skeptical that so much information could easily be handled in such a way, Julie Samuels, an EFF staff attorney, told the judge that she wasn't suggesting a solution would be easy as "flipping on a switch," but she implored him not to forget innocent third parties.

As for MegaUpload itself, the day started off well when the judge agreed to allow them to be heard during the hearing. The United States had argued in a brief that it was improper that they should appear before MegaUpload's defendants had appeared in court. Rothken told the judge that his clients needed access to the servers to prove their case and that he was confident a deal could be worked out between the interested parties that would protect copyright owners as well as the rights of his clients.

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